U.S. Biofuels Market Size, Share, and Trends 2024 to 2034

U.S. Biofuels Market Size and Forecast 2024 to 2034

The U.S. biofuels market size is worth around USD 64.06 billion in 2024 and is anticipated to reach around USD 106.02 billion by 2034, growing at a CAGR of 5.17% over the forecast period 2024 to 2034.

U.S. Biofuels Market Key Takeaways

• By fuel type, the ethanol segment dominated the market in 2023.
• By fuel type, the biodiesel segment is growing at a faster rate during the forecast period.
• By feedstock, the vegetable oil segment dominated the U.S. biofuels market in 2023.

Market Overview

The U.S. biofuels market refers to the global industry involved in the production, distribution, and consumption of renewable fuels derived from organic materials, primarily plants and animal fats. Biofuels are considered a sustainable alternative to fossil fuels such as coal, oil, and natural gas because they are produced from renewable biomass sources and emit lower levels of greenhouse gases when burned. Since they offer the potential to lower dependency on fossil fuels and lessen greenhouse gas emissions, biofuels derived from renewable biological resources like plants and algae have attracted much attention. They are widely employed in transportation as an alternative to traditional fossil fuels.

The two most popular biofuels in the U.S. are ethanol, mainly sourced from corn, and biodiesel, usually made from soybean oil or leftover cooking oil. They are combined with gasoline and diesel to promote greener energy sources and lower emissions.

The aviation and maritime sectors are investigating biofuels to lower their carbon footprint. Bio-based sources of sustainable aviation fuels (SAF) are being tested and used in commercial aircraft. Simultaneously, biofuels are being researched as potential substitutes for maritime vessels to meet emissions standards.

• In June 2023, according to a court document, the U.S. Environmental Protection Agency anticipates requesting a one-week extension of the due date for the rule and then submitting its final proposal on biofuel blend volume limits for the years between 2023 and 2025.

U.S. Biofuels Market Data and Statistics

• In June 2023, Secretary of the U.S. Department of Agriculture (USDA), Tom Vilsack declared that the agency would use President Biden's Inflation Reduction Act to invest up to $500 million to expand the supply of domestic biofuels and provide Americans with more environmentally friendly gasoline options at the pump.

U.S. Biofuels Market Growth Factors

• Growing demand for renewable fuels and increasing awareness of greenhouse gas emissions play a crucial role in the dynamics of the U.S. biofuels market. Fuels of the future, such as biodiesel and cellulosic ethanol, are less harmful to the environment and are thus being adopted globally.
• Enhanced cost-competitiveness and efficiency of biofuel production technology.
• The goal is to reduce reliance on foreign oil through homegrown, renewable fuel sources. 
• Increasing need for bio-based, sustainable aviation fuels.
• Investigation of non-food feedstocks such as algae and cellulosic biomass.
• Escalating investor interest in the biofuels industry's potential.

Market Scope

Market Dynamics

Drivers

Growing demand for cleaner fuels

The U.S. biofuels market is observed to grow with increasing demand for cleaner fuels. People are choosing cleaner energy sources over traditional fossil fuels because they emit fewer greenhouse gases and other pollutants and are more conscious of the effects of climate change and air pollution. Growing consumer inclinations toward renewable and sustainable energy sources fuel the need for biofuels in transportation and other industries. Furthermore, companies see the financial benefits of producing biofuels and invest to increase capacity.

Development of advanced biofuels

In broad terms, first-generation biofuels and conventional fossil fuels emit more greenhouse gases than advanced biofuels. In a world where the focus is on reducing climate change, this reduction in carbon footprint is caused by sustainability goals and legislation, making them more and more appealing. Advanced biofuels attract money and promote economic growth by opening new market niches and investment opportunities. Advanced biofuels should become more affordable as production increases and technology advances, giving them a competitive edge.

Restraint

Uncertain future of mandates

Market demand and investment decisions within the biofuel business can be significantly impacted by changes in government policies and laws regulating biofuel requirements. Future mandate uncertainty makes manufacturers and investors hesitant, which lowers investment and innovation. Such uncertain future of mandates creates a restraint to the U.S. biofuels market.

Mandates about biofuels that need more clarity may discourage prospective investors from joining the market or growing their current businesses. Investors may see biofuel projects as risky endeavors without precise and reliable regulations, which would discourage investment in new infrastructure and technology.

Opportunities

Addressing potential land-use change concerns

Changes in land use issues can be reduced by highlighting sustainable feedstocks, including algae, non-food crops, and agricultural waste. This strategy ensures biofuel production doesn't interfere with food crops or invade essential ecosystems. A more ecologically conscious biofuel business can be promoted by implementing regulations that support sustainable feedstocks and prohibit changing land use for biofuel production. This could involve penalizing land-use changes and offering incentives for sustainable behaviors.

Developing bio-based chemicals and plastics from biofuels

When biofuels are used as feedstock for manufacturing chemicals and plastics, product offerings can be diversified, lowering reliance on conventional fossil fuels and offering substitutes made from renewable resources. There is a sizable market for bio-based chemicals and plastics due to rising consumer awareness and governmental pressure to choose ecologically friendly products, creating growth opportunities for the U.S. biofuels market.

Economic development opportunities include job creation and investment in rural regions where biofuel feedstock farming and biorefineries are created by manufacturing bio-based chemicals and polymers.

Fuel Type Insights 

The bioethanol segment was found to dominate the U.S. biofuels market in 2023. As a result of regulations like the renewable fuel standard (RFS), which requires ethanol to be blended into gasoline, ethanol producers now have a guaranteed market. The United States has a lot of corn, which makes it easy and dependable to produce ethanol from feedstock. The most prevalent kind generated in the US is corn ethanol. When government incentives exist or oil prices are high, ethanol has proven to be economically competitive with gasoline.

The biodiesel segment is observed to be the fastest growing in the U.S. biofuels market during the forecast period. renewable fuel standards (RFS) require a specific number of renewable fuels to be blended with transportation fuels also impacts the biodiesel segment of the U.S. biofuels market. Moreover, the production and use of biodiesel are encouraged by several federal and state incentives, including tax credits and grants, making it profitable for producers and users. Growth in the industry has been aided by investments in biodiesel production facilities and infrastructural expansion, which have strengthened capacity and distribution networks.

• In May 2023, the Clean Fuels & Products Shot, introduced by the U.S. Department of Energy, shared its intentions to reduce greenhouse gas emissions from carbon-based fuels drastically. One way to achieve this is by increasing biomass and waste feedstocks. The program is the seventh element of the organization's Energy Earth Shot initiative.

Feedstock Insights

The vegetable oil segment dominated the U.S. biofuels market in 2023. Cleaner, renewable fuel sources, such as biodiesel derived from vegetable oil, are in higher demand as global warming and the need to cut greenhouse gas emissions become more widely recognized. Within the U.S. biofuels market, the demand for vegetable oil-based biodiesel is growing due to growing interest in sustainable alternatives to conventional fossil fuels, which presents growth and investment prospects in the industry.

The coarse grain segment is expected to witness expansion at a significant level during the forecast period. The US is one of the world's top producers of maize, and it serves as the nation's primary feedstock for ethanol manufacturing. Corn is a cheap and easily accessible material for the manufacturing of biofuels due to its plentiful domestic availability. The processing and delivery of ethanol derived from corn is the primary focus of the current infrastructure, which includes ethanol facilities and distribution networks. This developed infrastructure facilitates the production of ethanol derived from corn. The efficiency of producing ethanol from maize has increased due to technological advancements, making it a more financially viable option than other feedstocks.

U.S. Biofuels Market Companies

• Cargill
• DowDuPont, Inc.
• Archer Daniels Midland Company
• Butamax Advanced Biofuels LLC
• LanzaJet, Inc

Recent Developments

• In May 2023, Oleo-X declared the opening of its facility for pretreating sustainable aviation fuel (SAF) feedstock and renewable diesel.
• In February 2023, KBR declared its partnership with Swedish Biofuels AB, a technology creator and leader in advanced biofuel research, to introduce Sustainable aviation fuel (SAF) technology.
• In January 2023, Clean Fuels LLC declared its plan to construct a new biofuel terminal in National City, California, capable of translating SAF, ethanol, biodiesel, and renewable diesel. Clean fuels from the U.S. Gulf Coast and Midwest will be efficiently transported to the region by the BNSF Railway, which will serve the terminal.

Segments Covered in the Report

By Fuel Type

• Biodiesel
• Ethanol

By Feedstock

• Coarse Grain
• Non-Agri Feedstock
• Biomass
• Vegetable Oil
• Sugar Crop
• Jatropha
• Others